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Owen_Cotton-Barratt comments on Risk-neutral donors should plan to make bets at the margin at least as well as giga-donors in expectation - Effective Altruism Forum

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Comment author: Owen_Cotton-Barratt 31 December 2016 05:18:28PM 5 points [-]

Thanks for such a thorough exploration of the advantages of scaling up, and why small donors may be able to beat larger institutions at the margin. I'd previously (prior to the other thread) thought that there was typically not that much to gain (or lose) from entering a lottery, but I'm now persuaded that it's probably a good idea for many small donors.

I still see a few reasons one might prefer not to commit to a lottery:

1) If you see significant benefit to the community of more people seriously thinking through donation decisions, you might prefer to reserve enough of your donation to be allocated personally that you will take the process seriously (even if you give something else to a donor lottery). Jacob Steinhardt discusses this in his recent donation post. I'm sympathetic to this for people who actively want to take some time to think through where to give (but I don't think that's everyone).

2) If you prefer giving now over giving later, you may wish to make commitments about future donations to help charities scale up faster. This is much harder to do with donor lotteries. If you trusted other lottery entrants enough you could all commit to donating to it in the future, with the ability to make commitments about next year's allocation of funds being randomised today. But that's a much higher bar of trust than the current lottery requires. Alternatively you could borrow money to donate more (via the lottery) today. If you think that there are significant advantages to the lottery and to giving earlier, this strategy might be correct, even if borrowing to give to a particular charity is often beaten by making commitments about future donations. But if you think you're only getting a small edge from entering the lottery, this might be smaller than the benefit of being able to make commitments, and so not worthwhile.

3) If you think you might be in a good position to recognise small giving opportunities which are clearly above the bar for the community as a whole to fund, it could make sense for you to reserve some funds to let you fill these gaps in a low-friction manner. I think this is most likely to be the case for people who are doing direct work in high-priority areas. Taking such opportunities directly can avoid having to pull the attention of large or medium-sized funders. This is similar to the approach of delegating to another small donor, where the small donor is future-you.

Comment author: Carl_Shulman 31 December 2016 06:37:54PM 2 points [-]

Thank you for the thoughtful comments Owen.

If you see significant benefit to the community of more people seriously thinking through donation decisions, you might prefer to reserve enough of your donation to be allocated personally that you will take the process seriously (even if you give something else to a donor lottery). Jacob Steinhardt discusses this in his recent donation post

I agree. In the donor lottery FAQ and announcement post, this is discussed. Ctrl-f for 'practice people get thinking about charity.' I raise the possibility of setting some money aside for practice and symbolic donations. Jacob using his particular skills to identify CS opportunities (which he can also recommend to larger donors) makes particular sense. And he is putting 40% into the donor lottery too, which is your #3.

If you prefer [giving now over giving later, you may wish to make commitments about future donations to help charities scale up faster. This is much harder to do with donor lotteries

I agree with this in cases where the universe of donors available is or will be small, and that donor lotteries don't address committing/borrowing on future donations. On the other hand, strong small growth startups should be a limited portion of the charitable universe, and could tend to get extra funds from more informed donors (who could structure their grants over one or more years).

If you think you might be in a good position to recognise small giving opportunities which are clearly above the bar for the community as a whole to fund, it could make sense for you to reserve some funds to let you fill these gaps in a low-friction manner.

This is true if you expect such opportunities to be smaller than your donation/DAF saving when they arise. If they are often larger, then you might do better to team up to form a low-friction risk pool with others, at least when the donations would be to charities that can receive money from a DAF. There is also a class of opportunities that are not tax deductible, and can't be funded through a DAF (leading the Zuckerberg-Chan Initiative to set up as an LLC so that they can also, e.g. invest in companies).